Gold is one of the oldest assets in existence.
Gold has always served as a store of value. From its use as a currency in ancient times to its
investment use and utility today, gold has always served as a store of value. The 21st century
has been marked as an age of excessive leverage and money printing, bringing into question
the full faith and credit of fiat currencies and government bonds, which once offered investors
and savers greater security and value. Given gold’s unique ability to hedge against such risks,
offer diversification benefits versus other asset classes and deliver total returns, investors
should strongly consider the yellow metal as part of any investment allocation.
1. Throughout history, gold has been an unparalleled long-term store of value.
In Roman times, one ounce of gold was enough to buy one toga and accessories. Today, one ounce of
gold can buy a tailored suit or a wedding dress.
2. Gold has kept up with inflation and its purchasing power has increased, while the U.S. dollar has lost value and purchasing power.
Gold has kept up with inflation and its purchasing power has increased, while the U.S. dollar has lost value and purchasing power.
1930
In 1930, 1/100 oz of gold could buy
2.3 loaves of bread while US$1 could buy
11 loaves of bread.
Today
In 2022, 1/100 oz of gold can buy
9.7 loaves of bread while US$1
can buy just one-half a loaf of bread.
3.Gold may be a good investment option when real interest rates
are low.
During periods when interest rates adjusted for inflation are low (real interest rates), gold has
historically performed well. Today, the price of everyday goods and services in the U.S. economy is
increasing quickly, leaving traditional savers with potentially less purchasing power.
4. The power of gold versus currencies.
Since the gold standard was abandoned in 1971, gold has performed as a universal reserve asset
that central banks, investors and private individuals return to it especially in times of crisis. In 2022,
gold posted strong gains against other currencies as shown here. The year was characterized by
rising interest rates as central banks attempted to combat inflation that was markedly higher than
government targets, which undermined confidence in government reserve currencies. We believe gold
will continue to gain acceptance as a reserve currency in many countries and to establish itself as an
anchor of confidence and purchasing power.
5.Gold is a physical asset which cannot be hacked, erased or degraded.
Gold has served as a store of value and medium of exchange for millennia due to its fixed supply, broad
adoption and safe haven-like characteristics. Fiat currencies, such as the U.S. dollar, are also widely
used as a medium of exchange but can be printed at the will of governments. Rising money supply and
inflation can mean that over the long-run, fiat currencies may lose relative purchasing power.
5 Gold is a physical asset which cannot be hacked, erased or degraded.
Gold has served as a store of value and medium of exchange for millennia due to its fixed supply, broad
adoption and safe haven-like characteristics. Fiat currencies, such as the U.S. dollar, are also widely
used as a medium of exchange but can be printed at the will of governments. Rising money supply and
inflation can mean that over the long-run, fiat currencies may lose relative purchasing power.
China and India are the world’s largest
consumers of gold, mainly used in jewelry.
“Long term, the fundamental macro outlook for gold remains the strongest in decades.
We are currently in a state of unprecedented expansion and reach of monetary and fiscal
policies, akin to a grand experiment.” – Paul Wong
6. Gold demand may increase alongside growing middle classes in Asia.
In many eastern countries, such as China and India, gold is a highly sought after asset and often has
sentimental value. For example, gold, typically in the form of jewelry, is an integral part of a wedding
dowry in India. Chinese investors tend to have a preference for real assets, such as gold and real
estate, over financial assets like stocks and bonds which are often preferred by western investors.
Demand for gold may increase as demographic trends point to growing middle classes and wealth in
eastern countries while western economies age
Central banks purchased 1,136 tonnes of gold worth ~$70 billion in 2022,
the highest amount on record.- Source: The World Gold Council.
“Gold has been a splendid hedge against financial and economic disruption.”
– Danielle DiMartino Booth
Olympic gold medals must contain a minimum of 6 grams of gold, but are predominately made of silver.
7.Gold has outperformed other asset classes
Gold has outperformed major asset classes over the past 23 years, historically enhancing returns and
increasing diversification.
8. Gold can be a powerful investment portfolio diversifier.
Many major asset classes are highly correlated, which means that they tend to move in the same
direction at the same time. This is because many assets, like stocks, real estate or commodities, all
tend to rise and fall with economic performance and investor sentiment. The price of gold is driven
by different factors than many major assets, leading to a low correlation.* In other words, gold’s
performance moves independently and may help serve as a return diversifier within a broader multi-
asset portfolio.
9. Gold has been a safe haven during economic and political instability.
Investors seek out gold for its safe haven quality during periods of economic and political instability.
Most recently, gold outperformed stocks and bonds in 2022, which was marked by the Russia-Ukraine
War, and gold outperformed during the height of the COVID-19 pandemic crisis.1 According to the
World Gold Council,* gold’s performance during periods of crisis has risen to become the “top reason
for central banks to hold gold”
10. Gold is undervalued versus stocks.
In a world of high stock valuations and low bond yields, gold may be one of the only undervalued asset
classes. At just 48% currently, the ratio of the gold price to U.S. stock prices is quite low.
The average lifespan of a fiat currency is about 35 years, with hyperinflation being the most common precursor
before collapse or reform.
“Implementing an outright or supplemental position to gold reduces risk without diminishing long-term expected returns.”
– The World Gold Council 2021
11. Gold has appreciated alongside exploding government debts.
Gold has historically appreciated as U.S. Federal Debt levels have risen. U.S. Federal Debt is now 20% greater than the size of the entire U.S. economy (as measured by U.S. Gross Domestic Product or “GDP”). During disruptive periods like the COVID-19 crisis, the U.S. government tends to issue massive debt to help stimulate the economy. While this may have helped support economic recovery in the near-term, the U.S., along with many other countries, has accumulated debt at a faster pace than its economy has grown. The crushing global debt burden is likely to weaken major fiat currencies (like the U.S. dollar) and gold can help protect investor wealth.